How to Donate Bitcoin to Nonprofits
Cryptocurrency continues to be one of the fastest-growing forms of payment available, with Bitcoin remaining the most recognizable and successful cryptocurrency on the market. Despite this popularity, Bitcoin is still something of a mystery for some donors. Below, we break down this cryptocurrency, and how you can use it as the payment type for your next donation.
What Is Bitcoin?
The world’s first cryptocurrency, Bitcoin was released in 2009 by a figure known as Satoshi Nakamoto, whose real identity is unknown. Bitcoin introduced the concept of decentralized digital currency, which means that value isn’t held in a centralized place and is instead distributed across a peer-to-peer network of individual devices.
Bitcoin has inspired the release of thousands of other cryptocurrencies (called altcoins), but it remains by far the most successful. Bitcoin accounts for nearly two-thirds of the entire crypto marketplace and a single Bitcoin reached a record-high worth of $54,000 in November 2021. Keep in mind that cryptocurrency markets are more volatile than other currencies, so this price fluctuates wildly.
If you own value in Bitcoin or another cryptocurrency, this gives you up the opportunity to donate it to support your favorite nonprofits.
How to Donate Bitcoin
Thankfully, donating Bitcoin to tech-savvy nonprofits is relatively simple and easy. However, there are still a few steps involved that you need to be aware of.
Most cryptocurrency value is held in virtual wallets. These are essentially secure locations that hold the private keys used to access your Bitcoin. These can be physical hardware wallets (usually in the form of USB flash drives) or mobile apps. Among the best crypto wallets are Coinbase, Electrum, Ledger, and Mycelium.
These wallets are also a fundamental part of transferring cryptocurrency value to someone else, including nonprofits. These transactions are either considered on-chain or off-chain—depending on whether the transaction happens within or outside of the blockchain. The main consideration here is that on-chain transactions usually incur a fee, while off-chain transactions don’t.
From within the wallet, donors can:
- Select which cryptocurrency they’d like to donate
- Select an amount to give, which can be toggled between Bitcoin and U.S. dollars
- Input the crypto address of the nonprofit you’d like to support
- Leave a note specifying what or whom your donation is for
- Connect to a crypto-ready donation platform; we have a few options listed below
In this way, transferring Bitcoin is not much different from paying your friends using other popular payment apps like Venmo or Zelle.
Why Should You Donate Bitcoin?
1. Bitcoin is fast and easy
For nonprofits who accept cryptocurrency donations, the process is among the fastest options to receive the donation. No more waiting for a wire transfer or for a check to be mailed in. Because Bitcoin is completely digital, the transfer into a nonprofit’s account happens nearly instantaneously, which means your donation can be put to use that much more quickly.
2. Bitcoin is private
The privacy of all decentralized cryptocurrencies is what attracts many people to it in the first place. This advantage carries over to donating your Bitcoin to a nonprofit. A survey of donors in 2021 by Give.org showed that data privacy is an increasingly important factor in their decision.
3. Bitcoin gives you tax advantages
There are some tax advantages to donating Bitcoin to nonprofits. You can avoid paying some capital gains taxes on profits from your cryptocurrency and therefore pay less on your tax return. Taxes tend to be higher on Bitcoin, because the IRS considers it property and there can be capital gains on these types of assets. But donating Bitcoin to charitable organizations offsets some of those taxes.
4. Bitcoin is cheaper to process
Many people give online using a credit or debit card, but unfortunately, that still means passing along the card processing fees back to the nonprofit, which cuts into your gift. Bitcoin donations tend to see lower transaction costs.
5. Donations help legitimize Bitcoin
Among the biggest concerns around cryptocurrencies like Bicoin are their newness and volatility. Bitcoin is gradually being accepted by a larger swath of the population, but many people remain skeptical.
Donating Bitcoin to nonprofits and encouraging more charities to accept digital currencies can help bring cryptocurrency further along into public acceptance. This in turn can make Bitcoin less volatile and therefore more valuable for those who own some.
Where to Donate Bitcoin
Classy’s Crypto Giving Fund offers three cause categories that donors can give to: food relief, hospitals and health, and community support. Each cause category contains several organizations and the donations are divided evenly among the nonprofits within that category. Donors can make donations via Bitcoin, Ethereum, or USD Coin.
Give Crypto is itself a nonprofit that distributes cryptocurrency donations to vulnerable populations. This organization centers its mission specifically around using cryptocurrency for making a positive impact on the world.
Some traditional banks and financial institutions can process Bitcoins donations for you, directly from your account. Fidelity Bank is one such example. Talk to your own bank to see if this is an option they offer as well.
Your Favorite Nonprofit
Nonprofit organizations are increasingly accepting Bitcoin donations on their own. After all, this is a growing opportunity for nonprofits to receive funds. Here are a few great examples of charities that currently accept Bitcoin as donations:
If you already have nonprofits that you enjoy giving to, ask them if Bitcoin donations are an option. If they aren’t yet, you could send them some resources to help them start soon.
The Future of Bitcoin Donations and Nonprofits
Given the continued growth of cryptocurrency, it only makes sense that digital donations will continue to rise as well.
Cryptocurrency users are shown to be younger (with an average age of 38) and have a higher net worth (with an average annual income of $111,000) than the typical nonprofit donor. Cryptocurrency donations are also much larger than the average charitable gift ($11,000 compared to $128) and more crypto users are more likely to give than the general population (45% compared to 33%).
These statistics show that digital currencies are a viable and increasingly important part of the nonprofit industry’s future. This also means that nonprofits (especially smaller organizations) should start taking advantage of this trend—or risk falling behind.
On the same token, Bitcoin owners can see plenty of benefits from making donations to their favorite nonprofits. This has even led to other digital assets like NFTs being donated to charities. As cryptocurrencies become a more normal part of our financial picture, expect for Bitcoin gifts to be even more common in the future.
Dive Into Crypto Donations
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